The European Union will delay for two months the full impact of import tariffs it planned to put on Chinese solar panel equipment, to allow Chinese manufacturers to negotiate a settlement with European authorities that could defuse one of the biggest disputes over unfair trade in recent decades, officials said Tuesday.

The tariffs will come into force Thursday at around a quarter of the level seen in a European Commission plan circulated last month that called for tariffs of between 37.3% and 67.9%, depending on the company, officials said. The tariffs--which will cover solar panels and their main components, solar cells and poly-silicon--were supposed to average around 47%.

The Commission, the EU's executive arm, is giving Chinese solar panel manufacturers until Aug. 6 to propose an acceptable alternative to the tariff plan. In trade disputes this is usually a commitment to sell solar panels in the 27-nation EU above a minimum price. If an agreement isn't reached, the tariffs will come into force at the originally-planned level.

European solar panel manufacturers, led by the German firm SolarWorld AG (SWV.XE), sought the tariffs in a complaint filed with the Commission last year. Chinese-made panels now account for roughly 80% of the European market. European manufacturers allege Chinese firms have sent prices plummeting and forced dozens of European firms to shut production and seek bankruptcy protection.

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